How Data and Analytics Can Help Grow Your Business

"Information is the oil of the 21st century, and analytics is the combustion engine," – Peter Sondergaard, Gartner Research.

Data is out there. Take it. Use it. The power of information can help grow your business, cut costs, improve customer relationships, enhance product quality…the list goes on and on. The tricky part is knowing how to use that power.

In the 21st century, a business owner should have an arsenal of data collecting and analyzing tools to have a chance at outrunning the competition. Let's talk about a few ways data and analytics can help your business.

1. Segmenting Your Target Audience

Before you start selling your product, you need to identify the target audience. With over 4 billion people using the Internet worldwide, your audience must be out there, waiting for you to make an offer.

You have to do an in-depth analysis to identify which most profitable audience segments are interested in your products. While large segments are usually based on demographics (age, gender, education, income), smaller segments involve engagement patterns on websites, interests on social media, and much more.

By analyzing the readily available data, you can achieve a high conversion rate and reduce your marketing costs. According to HubSpot, companies that take the right approach to audience segmentation report as much as 760% revenue increase.

Many companies calculate CLTV (Customer Lifetime Value) to figure out how profitable the entire future relationship with a certain client will be.

By segmenting your audience, you can personalize your products and your messages. According to Accenture, consumers are more likely to buy products and services personalized for their needs.

2. Improving Product Development

To stay competitive, your company must develop products and services specifically tailored to the clients' needs. Knowing what works for your target audience and what doesn't is impossible without analytics.

According to software developers from Tricension, by arranging surveys, paying attention to reviews, and focusing on customer feedback, you can gather sufficient information to figure out which direction your product development efforts should be going. You can also take advantage of A/B testing to see which approaches work for your clients while optimizing your marketing efforts.

The deeper your analysis of the customer experience is, the easier time you'll have improving it. Such analytics can cut costs and prevent you from going in the wrong direction.

One of the brightest examples of customer reviews influencing product development was Mozilla rebranding. The company created two designs and asked the clients' opinions. They showed that collecting reviews and analyzing them properly could lead to higher profits, better customer experience, and increased brand awareness. Meanwhile, Apple uses NPS surveys to generate over $25 million in additional annual revenue.

3. Practicing Flexibility

Whatever niche you are in, the market is likely to be changing quickly. As the competition grows, converting new leads becomes more and more difficult. Many companies decide to focus on retaining existing clients. With 65% of the company's business coming from existing customers, such a resource is tough to underestimate.

According to the research done by Bain & Company, a 5% increase in customer retention produces more than a 25% increase in profit.

Retaining clients successfully involves working on your agility. Customers' changing needs and growing demands have to be analyzed timely to prevent them from moving their business to the competition. An ability to quickly adjust your retention strategy and offer new solutions could keep your business afloat.

4. Forecasting Sales

Knowing what the future holds for your business is possible when you take the right approach to analyze the historical customer data. This data can give you an accurate prediction of how much your company could earn in a set period.

With this knowledge, you can manage the workforce and resources more accurately to improve sales and output. Getting rid of waste can help your company be more agile so it can respond to the market changes timely.

You can also use historical data to see how well your company is doing compared to the industry averages. This can help you figure out if your approach needs tweaking to stay ahead of the game.

Many top companies use the analysis of historical customer data to give their clients recommendations about future purchases, thus improving their experience.

According to research by AMR, even a 3 percent increase in the accuracy of the company's sales forecasting can boost profit margins by 2 percent.

5. Changing The Industry With Innovations

Data and its analysis are keys to creating something brand new. Some of the most successful startups that took advantage of customer data are Uber (2 - see image link below) and Airbnb. They didn't just create a profitable business. They completely changed their industries.

For example, Uber solved the biggest problems customers had with taxis - high cost and long waits by creating a huge database of self-employed drivers. Now the needs of both clients and drivers are satisfied.*

Bringing something brand new to the market and disrupting established industries may seem like a dream to an average business owner. However, by analyzing the available data correctly, you can make this dream come to life in a matter of months.

When you are collecting and analyzing information about your clients, you can figure out which problems they need to solve the most. This could lead to ideas for innovative solutions.

In Conclusion

Taking the right approach to data gathering and analysis can help you achieve new heights for your company and go further to disrupt the industry. The right analytics tools coupled with emerging technologies bring infinite possibilities.

About the Author:

Julia Suhoverhova is a professional content writer and a marketing expert. She writes SEO-related articles that help boost rankings of businesses around the world. Her goal is to help companies take full advantage of the latest marketing techniques.